Sutton can also lease the equipment for 5 end-of-year


Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5 year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10% and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the bank loan payment than the lease payment?

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Finance Basics: Sutton can also lease the equipment for 5 end-of-year
Reference No:- TGS0639144

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